Question Three

$(20$ marks$)$

Ditsapelo Unlimited on $1$ January $2024$ granted $300$ share appreciation rights $($SARs$)$ to each of its $200$ employees on the condition that they continue to work for the entity for two years. At $1$ January $2024,$ the entity expects that $50$ of those employees will leave each year.

During $2024,20$ employees leave Ditsapelo Unlimited. The entity expects that the same number will leave in the second year.

$25$ Employees are expected to leave during $2025.$

The SARs vest on $31$ December $2025$ and can be exercised during $2026$ and $2027.$ On $31$ December $2026,105$ of the eligible employees exercised their SARs in full. The remaining eligible employees exercised their SARs in full on $31$ December $2027.$

The fair value and intrinsic value of each SAR was as follows:

Reporting date

$31$ December $2024$

$31$ December $2025$

$31$ December $2026$

$31$ December $2027$

FV per SAR

P$10$

P$15$

P$16$

P$17$

Intrinsic value per SAR

P$16$

P$17$

Required:

a$)$ Calculate the amount to be recognised as a remuneration expense in the statement of profit or loss, together with the liability to be recognised in the statement of financial position, for each of the two years to the vesting date.

$(6$ marks$)$

b$)$ Calculate the amount to be recognised as a remuneration expense and reported as a liability in the financial statements for each of the two years ended $31$ December $2026$ and $2027.$

$(14$ marks$)$